Indian mills are planning to make raw sugar at the beginning of the new marketing season starting Oct. 1 as a rally in global prices to 4-year highs boosts demand for so-called raws from overseas, six industry officials told Reuters.
Indian mills traditionally produce white sugar for local consumption and make small amounts of raw sugar for exports.
But potential supply tightness in world markets in the December quarter after drought and frosts hit the sugarcane crop in top exporter Brazil prompted Indian mills to plan production of raw sugar for overseas sale.
"We are planning to start the season with raw sugar since it is easier to export than white sugar. Prices are also attractive and they are likely to remain firm," said B.B. Thombare, president of the West Indian Sugar Mills Association.
Exports from India could cap global prices and help boost supplies in Asia as the world's biggest exporter Brazil is likely to harvest a smaller crop than last year.
Mills have contracted to export around 725,000 tonnes of raw sugar and 75,000 tonnes of white sugar for shipment in November to January, dealers said.
However, although many mills in the western state of Maharashtra have decided to produce raw sugar for export they are not selling it in advance on expectations that prices will rise further overseas, said a Mumbai-based dealer with a global trading firm.
"Mills want to sell on the spot basis instead of signing advance contracts," he said.
Exporters are willing to buy raw sugar at around 32,000 rupees ($431) per tonne from mills, but producers are not ready to sell, said Praful Vithalani, president of the All India Sugar Trade Association (AISTA).
India could export at least 6 million tonnes of sugar in 2021/22 compared with 7.1 million tonnes in the current year, Vithalani said.
Strong export demand has also lifted local sugar prices by 10% since mid-July to the highest level in nearly four years.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU